the quantity demanded by consumers. In addition, the price elasticity of demand is larger in the long-run than in the short-run, and this holds true for all types of consumers, including residential consumers as well as industrial and commercial consumers. Price elasticity tends to be greater for industrial demand over residential demand (Howe and Rasmussen 34).
Because of this inelasticity of demand, regulators came to view themselves as working to protect the public interest against the predatory pricing techniques of the utility industry. If there were not regulation, electric companies would charge exorbitant prices in order to maximize their own profits. In addition, the industry itself has fought to maintain regulation since, although it places a limit on the profits earned by the companies, regulation also creates barriers for new competitors and thus helps companies maintain their market share and long term profitability (Copeland 292).
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